Pillar Guide · Updated July 2026
Company Voluntary Arrangement (CVA): A Complete Guide for 2026/27
A CVA lets a struggling but fundamentally viable UK company restructure its unsecured debt and keep trading, without directors losing control. This guide explains how a CVA proposal is prepared and voted on, the 75% creditor approval threshold and the connected-creditor safeguard, why CVAs cannot bind secured creditors without consent, how landlords have challenged retail CVAs for unfair prejudice, the nominee and supervisor roles, and what happens if the arrangement later fails.
What Is a CVA
A Company Voluntary Arrangement is a formal, court-recognised but out-of-court procedure under the Insolvency Act 1986 through which an insolvent or financially distressed company reaches a legally binding agreement with its unsecured creditors to repay some or all of what it owes, typically at a reduced level, over an extended period commonly running three to five years. Crucially, the company continues trading throughout under its existing directors, distinguishing a CVA sharply from administration or liquidation, where control passes to an independent insolvency practitioner.
CVAs rose to particular prominence during the wave of UK high-street restructurings between roughly 2018 and 2021, when major retail and casual dining chains used them to close underperforming stores and renegotiate rent with landlords while keeping the rest of the business trading.
Proposing a CVA
The company’s directors work with a licensed insolvency practitioner, who initially acts as “nominee”, to prepare a detailed proposal document. This sets out the company’s current financial position, an explanation of what led to its difficulties, and the specific terms being offered — for example a fixed monthly contribution for 60 months, or an agreed percentage of admitted debt repaid over time, sometimes alongside store or contract closures.
The nominee reviews the proposal for basic feasibility and reports to the court in a largely administrative filing, after which the proposal is put to a vote of creditors and separately to shareholders, typically conducted by correspondence or a virtual meeting rather than requiring an in-person gathering.
The 75% Approval Threshold
A CVA proposal is approved if creditors representing at least 75% by value of those who vote (not 75% of all creditors by number, or of total debt outstanding — only of those actually voting) approve it. A separate safeguard applies where more than 50% of the value voting in favour comes from creditors connected to the company, such as directors or associated companies owed money: in that situation, the approval is only valid if more than 50% of the unconnected creditors, by value, also vote in favour — preventing insiders from forcing through a deal that disadvantages independent trade creditors.
Once validly approved, the CVA becomes binding on every unsecured creditor entitled to vote, including anyone who voted against the proposal or did not vote at all, provided they received proper notice of the proposal and vote.
Secured Creditors Are Not Bound
A CVA can only compromise the rights of unsecured creditors, unless a secured or preferential creditor specifically agrees to be bound by its terms. This is a significant structural limitation: a company whose main financial pressure comes from a secured bank loan cannot use a CVA alone to restructure that debt without the lender’s separate consent. CVAs are consequently most effective for businesses whose principal financial strain is unsecured trade debt, commercial rent arrears, or HMRC arrears, rather than secured lending.
Landlords and Commercial Leases
CVAs became especially controversial in UK retail because they were frequently used to target landlords specifically — cutting rent, switching from quarterly to monthly payment, or closing and surrendering leases on underperforming stores — while leaving other creditor classes, such as key suppliers needed to keep trading, largely untouched. Critics argued this unfairly concentrated the pain of restructuring on one creditor group.
Landlords have a statutory right to challenge an approved CVA in court within 28 days on the grounds of “unfair prejudice” — that the arrangement treats them worse than other creditors in a broadly similar position without adequate justification — or “material irregularity” in how the proposal or vote was conducted. Several high-profile landlord challenges have succeeded in the UK courts, and separately a statutory arbitration scheme was introduced specifically for commercial rent arrears that accrued during the COVID-19 pandemic period, operating outside the ordinary CVA process.
The Supervisor Role
Once creditors approve the proposal, the nominee (or another appointed insolvency practitioner) usually becomes the CVA’s “supervisor”. The supervisor collects the payments the company has agreed to make, distributes funds to creditors according to the approved terms, monitors ongoing compliance, and reports to creditors — typically annually — on progress. If the company breaches the arrangement, most commonly by missing payments, the supervisor has powers to enforce the terms and, ultimately, to petition for the company’s winding up if the arrangement has collapsed beyond recovery.
What Happens If a CVA Fails
CVA failure rates are historically high, particularly for multi-year retail CVAs where underlying trading conditions continue to deteriorate after approval. If the company breaches the terms — most commonly by missing agreed payments — the supervisor or an affected creditor can apply to terminate the arrangement. The company then typically proceeds into administration or liquidation, and creditors become entitled to claim the balance of their original, pre-CVA debt rather than only the reduced amount agreed under the arrangement, since the discount was conditional on the CVA being honoured in full.
CVA vs IVA
A CVA is the corporate equivalent of an Individual Voluntary Arrangement (IVA), which serves the same restructuring purpose for a person’s personal debts rather than a company’s. Both share the same underlying legal framework, a similar nominee/supervisor structure, and a comparable creditor approval mechanism, but a CVA lets a company keep trading while restructuring its debts, whereas an IVA is an alternative to personal bankruptcy for an individual.
Public Record and Reputation
An approved CVA is registered at Companies House and appears in the company’s public filing history, visible to anyone carrying out a company search — including customers, suppliers and credit reference agencies. This visibility can make it harder to secure new trade credit or finance during and after the CVA period, a reputational cost that directors should weigh against the benefits of formal restructuring, particularly where a smaller, more discreet informal standstill agreement with a limited number of creditors might achieve a similar outcome with less public exposure.
When to Choose a CVA
A CVA suits a company that is fundamentally viable at its core, whose cash flow problems are driven mainly by unsecured trade debt, lease liabilities or HMRC arrears, and which needs breathing space to restructure that specific debt without losing control or ceasing to trade. Where secured lending dominates the balance sheet problem, or the underlying business is not viable even once unsecured debt is compromised, administration (potentially followed by a sale of the business) or liquidation is usually the more realistic route, since a CVA cannot by itself force a restructuring of secured debt.